Why do I hear so many negative things about IUL's
MAPFL BLOG
The Truth About IULs: Protection First, Growth Second
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It’s a type of life insurance that includes policy benefits plus a cash value component tied to an index, which is why it gets discussed as a “strategy” online.
The transcript says they’re not always wrong, but the criticism often leaves out important context, especially around what the policy is actually designed to do.
Because they present it as an “investment alternative,” instead of emphasizing that it should be purchased as life insurance first.
Because the policy includes real benefits and protections, and those benefits cost money.
Living benefits are features you can potentially use while you’re still alive, not just at death, and the transcript suggests that’s one reason these policies can make sense, especially for business owners.
Not All the Critics Are Wrong… But They’re Not Telling the Whole Story
First, let’s address the skeptics.
Many of the people who are against IULs bring up valid concerns — high fees, complex structures, and overpromises from agents. But often, they stop there. What they don’t tell you is that IULs were never meant to replace a traditional investment portfolio.
They’re a tool — and like any tool, they need to be used properly.
Financial Advisors vs. Insurance Agents: Two Sides of the Money Coin
Most financial advisors are focused on managing your assets in the market. Their role is to grow your money through stocks, bonds, and other investments.
On the flip side, some insurance agents (unfortunately) pitch IULs as an alternative to investing — and that’s where confusion begins.
Let’s be clear:
You should never buy an IUL just because someone says it’s a great investment. You should buy life insurance because you need life insurance — and because you value the living benefits that come along with it.
First Things First: Life Insurance = Protection
At its core, life insurance is about protection — for your family, your business, your legacy.
An IUL can provide:
- A tax-free death benefit to your loved ones
- Living benefits in case of chronic illness or disability
- Access to cash value during your lifetime
These are real benefits. And yes, they come with costs — fees that cover the insurance and policy administration. But you’re not just throwing money away. You’re getting value in return.
What Makes IULs Unique: Growth Potential Without Market Risk
One of the features that makes IULs attractive is the investment component.
With an IUL, your cash value is tied to a market index (like the S&P 500) — but you’re not directly invested in the stock market. That means:
- If the market goes up, you earn a capped return (usually around 8–12% max).
- If the market goes down, you don’t lose money due to market loss (your “floor” is typically 0%).
It’s a conservative way to grow your money with downside protection — especially when paired with the life insurance protection you’re already getting.
Living Benefits: It’s Not Just About Dying
One of the biggest misconceptions about life insurance is that it only pays out when you die.
That’s outdated thinking.
Modern IULs offer living benefits, such as:
- Access to the policy’s cash value through tax-free loans
- Coverage for critical, chronic, or terminal illness
- Potential to supplement retirement income
These features can be a game-changer, especially for business owners who want protection, flexibility, and long-term financial control.
Is an IUL Right for You?
Maybe — but only if it fits into your broader financial picture.
It’s probably a good fit if:
- You’re a high-income earner looking for tax advantages
- You want permanent life insurance with flexible cash access
- You’re a business owner planning for succession, exit strategy, or future liquidity needs
But it might not be a fit if:
- You can’t comfortably afford the premiums
- You only need temporary coverage (like 10 or 20-year term insurance)
- You’re looking for aggressive short-term growth
Final Thoughts: Don’t Believe the Hype (Or the Hate)
At the end of the day, IULs aren’t magic — but they’re not a scam either. They’re simply a tool that can work incredibly well when used correctly, and fail miserably when misunderstood or misused.
That’s why education matters.
Don’t rely on YouTube comments or a TikTok hot take. Talk to someone who can show you how this works based on your goals, your needs, and your long-term strategy.
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Why do I hear so many negative things about IUL's
Are you on social media? Are you doing research online because somebody talked to you about this funny thing called an ideal? Well guess what? The naysayers out there, the people who are against them, they’re not all wrong, but they’re not telling you the complete story. Reality is the investment and financial advisors out there. They’re out there to manage your money.
And a lot of times you have insurance agents that are running around selling ideals incorrectly, I will argue, as an investment alternative for you. Now, that is not the way that I would ever recommend purchasing or soliciting an ideal. You should be buying life insurance because you need life insurance and all the benefits that come along with having a life insurance contract.
And there’s a lot of them that I’m not going to get into on this video, but there’s a lot in addition to all of those benefits, right? Benefits cost money, which are fees. In addition to all of those benefits, there’s also an investment component to these. So that way you aren’t forfeiting all of the benefits of putting your money into the market.
But by buying all these other benefits, because the benefits are real and they’re necessary when the time comes, hopefully you never need the benefits until the ultimate. So you meet your maker. But in between now and then, there are a lot of living benefits built into these policies. And that’s why putting money into a life insurance contract very likely makes sense for you, especially if you’re a business owner.
So if you’d like to understand more about what I’m referring to, I’d be happy to have a conversation. Look for more of our videos, but best yet, just set an appointment. We’ll explain it. You can decide for yourself.